Astec Industries Reports Fourth Quarter and Full Year 2018 Results
Net Sales for 2018 of $1.172 Billion; Adjusted Net Sales for 2018 of $1.246 Billion Grew 5.9% Over 2017
Loss Per Share for 2018 of $2.64; Adjusted Earnings Per Share for 2018 of $2.92 Increased 17.3% Over 2017
Company Exits Wood Pellet Plant Business
CHATTANOOGA, Tenn. (March 1, 2019) – Astec Industries, Inc. (Nasdaq: ASTE) today reported results for the fourth quarter and year ended December 31, 2018.
Net sales for the fourth quarter of 2018 were $317.0 million compared to $312.4 million for the fourth quarter of 2017, a 1.5% increase. Domestic sales increased 1.1% to $248.2 million for the fourth quarter of 2018 from $245.4 million for the fourth quarter of 2017. International sales were $68.8 million for the fourth quarter of 2018 compared to $67.0 million for the fourth quarter of 2017, an increase of 2.8%.
Losses for the fourth quarter of 2018 were $47.0 million, for a loss of $2.08 per share, which includes the charges described below, compared to earnings of $10.9 million, or $0.47 per share, for the fourth quarter of 2017, which includes a $1.1 million income tax benefit from U.S. Tax Reform legislation.
Net sales for 2018 were $1.172 billion compared to $1.185 billion for 2017, a 1.1% decrease. Domestic sales decreased 1.8% to $915.8 million for 2018 from $932.3 million for 2017. International sales were $255.8 million for 2018 compared to $252.4 million for 2017, an increase of 1.3%.
Losses for 2018 were $60.4 million, for a loss of $2.64 per diluted share, which includes the charges described below, compared to earnings of $37.8 million, or $1.63 per diluted share, for 2017, which includes the aforementioned income tax benefit.
In the fourth quarter of 2018, the Company recorded charges totaling $90.6 million resulting from a write-off related to the Hazlehurst wood pellet plant, an inventory valuation adjustment, the exit of a subsidiary business in Germany and an impairment of goodwill. The following financial information for the fourth quarters and full years ended December 31, 2018 and 2017 excludes all of the impact of wood pellet plant activity, as well as the other fourth quarter 2018 charges, on the Company’s results during those periods:
- Net sales for the fourth quarter of 2018 were $317.0 million compared to $306.8 million for the fourth quarter of 2017, a 3.3% increase. Domestic sales increased 3.5% to $248.2 million for the fourth quarter of 2018 from $239.8 million for the same period of 2017.
- Net income for the fourth quarter of 2018 was $14.0 million or $0.61 per diluted share, compared to net income of $13.2 million or $0.57 per diluted share for the same period of 2017, an increase in earnings per share of 7.0%.
- Net sales for 2018 were $1.246 billion compared to $1.177 billion for 2017, an increase of 5.9%. Domestic sales increased 7.2% to $990.6 million for 2018 from $924.3 million for 2017.
- Net income for 2018 was $67.3 million or $2.92 per diluted share, compared to net income of $57.7 million or $2.49 per diluted share for the same period in 2017, an increase in earnings per share of 17.4%.
Commenting on the quarterly and full year results, Richard J. Dorris, Interim Chief Executive Officer, stated, “We are pleased with the 17.4% growth in adjusted earnings for the full year. Our core businesses remain strong and we continue to gain positive momentum. While results in our Infrastructure Group for the fourth quarter and year reflect our decision to exit the wood pellet plant business and a decrease in international sales, we are optimistic about opportunities for this segment in the coming year. We saw a good mix of activity across commercial and private construction driving performance in our Aggregate and Mining Group both domestically and internationally for the year, while 2018 sales growth in our Energy Group was driven by improved domestic sales. While we remain focused on execution in our individual segments, we continue to make progress in our strategic sourcing initiative and anticipate it will yield positive results in our procurement operations once it is completed in the second quarter. We are also working to identify further manufacturing cost optimization opportunities and look forward to providing more details as we move forward with these projects.”
Mr. Dorris continued, “During the past year, Astec’s Board and management team have taken decisive steps to improve the Company’s financial performance and ensure capital is directed to the areas that we believe will drive the greatest value for all shareholders. We made decisions to exit the wood pellet plant business, recording a write-off of our Hazlehurst plant in the fourth quarter, and discontinued operations at our underperforming subsidiary in Germany. While these actions resulted in one-time charges being recognized in the fourth quarter, we are confident these actions have strengthened our business for the future. We remain focused on executing our strategy and growing our leadership position in the manufacturing of equipment for the infrastructure, aggregate, mining and energy industries.”
The Company’s backlog at December 31, 2018 was $345.0 million compared to $411.5 million at December 31, 2017, a decrease of $66.5 million or 16.2%. Domestic backlog decreased 22.4% to $260.7 million at December 31, 2018 from $335.9 million at December 31, 2017, reflecting a $60.2 million reduction in pellet plant related backlog. International backlog increased 11.5% to $84.2 million at December 31, 2018 from $75.6 million at December 31, 2017. Excluding pellet plant backlogs, the Company’s December 31, 2018 backlog decreased $6.3 million, or 1.5%, compared to December 31, 2017.
Consolidated financial information for the fourth quarter and year ended December 31, 2018 and additional information related to segment revenues and profits are attached as addenda to this press release.
The Company identified certain material weaknesses in its internal control over financial reporting. As a result, the Company needs additional time to complete the compilation of information and finalization of its assessment of the effectiveness of internal control over financial reporting for its consolidated financial statements and related disclosures to be filed as part of the 2018 Form 10-K. The Company will file a Form 12b-25 with the Securities and Exchange Commission in order to extend the due date of its 2018 Annual Report on Form 10-K for 15 days, as permitted by Rule 12b-25 under the Securities Exchange Act.
Investor Conference Call and Web Simulcast
Astec will conduct a conference call today at 10:00 A.M Eastern Time to review its fourth quarter and full year results as well as current business conditions. The number to call for this interactive teleconference is (866) 682-6100. International callers should dial (862) 298-0702.
The Company will also provide an online Web simulcast and rebroadcast of the conference call. The live broadcast of Astec’s conference call will be available online at the Company’s website: www.astecindustries.com/conferencecalls. An archived webcast will be available for 90 days at www.astecindustries.com.
A replay of the conference call will be available through midnight on Friday, March 15, 2019 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Conference ID #43156. A transcript of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within 5 business days after the call.
Astec Industries, Inc. (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building; aggregate processing; oil, gas and water well drilling and concrete production. Astec's manufacturing operations are divided into three primary business segments: road building, (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and equipment for the extraction and production of fuels and water drilling equipment (Energy Group).
The information contained in this press release contains “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company, including statements about the effects on the Company from (i) product demand and pricing pressure, (ii) the effect of its strategic sourcing project (iii) efforts to adjust manufacturing capacity, and (iv) its backlog activity. These forward-looking statements reflect management’s expectations and are based upon currently available information, and the Company undertakes no obligation to update or revise such statements. These statements are not guarantees of performance and are inherently subject to risks and uncertainties, many of which cannot be predicted or anticipated. Future events and actual results, financial or otherwise, could differ materially from those expressed in or implied by the forward-looking statements. Important factors that could cause future events or actual results to differ materially include: general uncertainty in the economy, oil, gas and liquid asphalt prices, rising steel prices, decreased funding for highway projects, the relative strength/weakness of the dollar to foreign currencies, production capacity, general business conditions in the industry, demand for the Company’s products, seasonality and cyclicality in operating results, seasonality of sales volumes or lower than expected sales volumes, lower than expected margins on custom equipment orders, competitive activity, tax rates and the impact of future legislation thereon, and those other factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2018.
For Additional Information Contact:
David C. Silvious
Vice President, Chief Financial Officer and Treasurer
Phone: (423) 899-5898
Fax: (423) 899-4456
Stephen C. Anderson
Vice President, Director of Investor Relations & Corporate Secretary
Phone: (423) 899-5898
Fax: (423) 899-4456